Jakarta, CNBC Indonesia – United States Treasury Secretary Janet Yellen said she does not see the potential for a recession this year, in line with consumers' optimism about their finances. The United States (US) will face elections this year.

“I think 2024 will be a very good economic year. However, there are always risks,” said Yellen, quoted in an interview with ABC News, Thursday (25/1/2024).

According to Yellen, consumers and households feel confident enough in their personal financial situations and the economic outlook to spend money in ways that create jobs, create growth and provide them with the income to continue doing so.

“So, I don't see any reason why it couldn't continue.”

Yellen's comments come after a new GDP report showed an extraordinary year of economic growth for the US. This is contrary to economists' expectations regarding a recession. The Biden administration hopes this development can be used to change voters' pessimistic feelings about the economy in the future.

“The latest survey shows that the picture is changing. We've seen a massive improvement, improvement in consumer sentiment,” Yellen said, referring to the closely watched consumer sentiment index from the University of Michigan that hit its highest level this month since July 2021.

Looking to capitalize on economic optimism, Yellen and President Joe Biden visited the Midwest this week. In her major speech in Chicago, Yellen highlighted the administration's policy successes in infrastructure, manufacturing and clean energy. Meanwhile, just hours away, the president visited a new bridge construction project funded by his legislation in the key swing state of Wisconsin.

Yellen, not usually one to get involved in political disputes, joined in a direct attack on former President Donald Trump, the Republican candidate who is expected to be Biden's opponent.

When asked about recent comments from JP Morgan CEO Jamie Dimon indicating that the corporate world might welcome back Trump over his economic policies, Yellen said bluntly that Trump may have helped big companies, but he has done nothing for the middle class.

“Wealthy companies did very well. They saw their tax rates drop from 35% to 21%. And that's a benefit they enjoyed,” Yellen said. In this case, Yellen certainly attacked Trump for his signature tax cut law.

“This results in an additional deficit of US$2 trillion and does nothing for the struggling middle class,” he said.

Instead, he praised the Biden administration's successful investments that brought the country back from the brink of post-pandemic economic hardship. He called this condition the fairest restoration ever recorded.

But Yellen acknowledged the Biden administration still has a lot of work to do to achieve its goal of expanding the middle class, given the high costs of child care, food and housing.

“Apartment rents, food is probably 20% higher than before the pandemic. And I think that's something that's affecting sentiment,” he said.

“But what has happened over the past year, and I expect this will continue, is that wages have risen faster than prices have risen. Price increases have now almost become normal and wages continue to rise. The situation is improving,” said Yellen.

He also provides a sharp contrast between his generation and the current generation. He acknowledged that the American dream is now harder to achieve.

In a recent ABC News/Ipsos poll, only 27% of respondents said the American dream still survives, down sharply from 50% when the question was first asked in 2010.

“When I was growing up, 80 or 90% of the people in my generation did better than their parents. And that number has dropped significantly. And that's the American dream,” Yellen said.

“There are some areas of the country that haven't seen much economic progress,” he said. “That's something that has to change to keep the American dream alive and well.”

[Gambas:Video CNBC]

(haa/haa)